Flat Sales Growth Hammers Avery Dennison’s Quarter

By Deborah Crowe
Originally published January 31, 2012 at 10:38 a.m., updated January 31, 2012 at 3:38 p.m.

Shares of Avery Dennison Corp. fell more than 5 percent on Tuesday after the Pasadena label maker said fourth-quarter profit slid a worse-than-expected 81 percent on nearly flat sales.

The company also provided full-year guidance below analysts’ forecasts.

Avery Dennison, which also makes signage and packaging materials, reported net income of $22.2 million (21 cents a share), compared with $114 million ($1.06) in the same period a year earlier. Revenue rose less than 1 percent to $1.45 billion.

Excluding restructuring costs and other one-time items, profit equaled 39 cents a share. Analysts surveyed by FactSet on average expected adjusted profit of 46 cents a share on revenue of $1.59 billion.

The company this month announced it would sell its office and consumer products operations to 3M Co. for $550 million in cash, so it can focus more attention on pressure-sensitive packaging materials and retail-branding products. Chief Executive Dean Scarborough noted that despite “challenges of softening volumes and inflation” last year, the company increased its net operating income and generated nearly $300 million of free cash flow.

“Our employees did an outstanding job of meeting this year’s challenges with a strong focus on pricing, productivity, and working capital, and I want to thank them for their discipline and dedication,” said Scarborough in a statement.

The company forecast full-year earnings, excluding restructuring costs, of between $1.80 and $2.15 a share. Analysts are expecting $2.69 a share. Despite the mixed quarter, Avery said it would raise its quarterly dividend by 8 percent to 27 cents a share, which will be payable March 21.

Shares closed down $1.55, or 5.4 percent, to $27.15 on the New York Stock Exchange.